Published on: 04th March 2026
Authored by: Saumya Mishra
NALSAR University of Law, Hyderabad
Citation : (2025) ibclaw.in 37 SC
Court : Supreme Court of India
Bench : Mr. Justice Hrishikesh Roy, Mr. Justice Sudhanshu Dhulia and Mr. Justice S.V.N. Bhatti
Date of Judgment : 29th January 2025
Facts of the case
DBS Bank filed an application with the NCLT in Kolkata for initiation of Corporate Insolvency Resolution Process against Hindustan National Gas Industries Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). This application was admitted on 21st October 2020. As part of the insolvency process, any Expression of Interest (EOI) or Request for Resolution Plan (RFRP) submitted by a potential resolution applicant needed to be approved by the Competition Commission of India prior to the Committee of Creditors approving any resolution plan.
Two Companies, Independent Sugar Corporation Ltd. (INSCO) and AGI Greenpac Ltd., submitted Resolution Plans in April 2022. In an email on 25th August 2022, the Resolution Professional relaxed the requirements that CCI approval must be obtained before submitting forms by allowing it to be received after the Committee of creditors has approved a Resolution Plan, but before it is submitted to the NCLT.
Initially, AGI Greenpac submitted a Form I application to the CCI, but it was found “not valid” on 22 October 2022. The Company then submitted a new Form II application, which had not been approved before the Committee of Creditors approved the Resolution Plan. When 98% of the votes of the Committee of Creditors supported AGI Greenpac’s Resolution Plan on 28th October 2022, and only 88% supported INSCO’s Resolution Plan, AGI Greenpac’s Resolution Plan was awaiting approval from the CCI. AGI Greenpac applied to CCI on 3rd November 2022, which received conditional approval on 15th March 2023, subject to divesting of HNGIL Rishikesh plant.
INSCO contested this procedure before NCLT/NCLAT on grounds that AGI Greenpac’s plan did not meet requirements of Section 31 (4) IBC, however both NCLT/NCLAT upheld AGI Greenpac’s plan and found CCI’s timng to be directory.
INSCO appealed NCLAT’s orders to the Supreme Court for seeking relief against both Resolution Plan and CCI’s conditional approval.
Issues
- Whether the proviso to Section 31(4) of the IBC requires the CCI to approve a proposed combination before the CoC approves the Resolution Plan?
- Whether obtaining previous CCI permission is required or optional?
- Whether the CCI’s clearance was void due to procedural errors under the Competition Act, 2002?
- Does an unsuccessful Resolution Applicant have the right to file an appeal?
Arguments
INSCO (Appellant)
INSCO alleged that AGI Greenpac obtained CoC approval for its plan without necessary CCI authorization which constituted a breach of both Section 31(4) of IBC and RFRP regulations. They asserted that the Resolution Professional (RP) exceeded his authority when he relaxed CCI timelines because the procedure demanded strict compliance which would render the process void if not followed. They argued that CCI’s conditional approval after CoC establishment violates regulations while they identified Competition Act violations through HNGIL’s lack of SCN issuance.
AGI (Greenpac) (Respondent)
AGI Greenpac asserted that Section 31(4) IBC proviso functions as a directory command which requires only NCLT stage approval to fulfil legal requirements. They contended that following the law exactly would prevent IBC from achieving its objective which mandates rapid case resolution because non-compliance with the law creates no legal repercussions and existing Supreme Court and NCLAT rulings support this interpretation. They asserted that INSCO should not participate in the case because it lost its application and the CoC and RP followed existing legal regulations.
CoC and RP
The CoC and RP stated that IBC timelines need special consideration because they must be balanced with requirements in the Companies Act, 2013. The RP executed his duties according to legal standards and NCLAT precedents because he conducted his work as a procedural functionary who did not undertake substantive responsibilities.
CCI
The CCI defended its approval process, asserting that it followed proper procedure and that the notice to AGI Greenpac was sufficient under the Competition Act 2022.
Judgment and Ratio Decidendi
The Supreme Court in this case addressed key issues regarding Section 31(4) of the IBC, the role of the Resolution Professional, the timing of CCI approval, and the rights of unsuccessful resolution applicants.
Locus Standi of Appellants
The court ruled that Section 62 of the IBC defines “any person aggrieved” through a broad interpretation that includes all individuals who suffered damage from the resolution process. Unsuccessful resolution applicants already received this right and because their plans had approval potential from CoC, which allows them to contest the approval process.
Proviso to Section 31(4) of IBC (Majority : Mr. Justice Hrishikesh Roy and Mr. Justice Sudhanshu Dhulia)
The majority explained that Resolution Plans which involve mergers must obtain CCI approval before CoC approval according to the 2018 inserted proviso. The court, emphasized that the statutory language is clear and unambiguous, requiring strict compliance. The word “prior” is deliberate, and the court cannot rewrite the statute even if legislative notes or memoranda appear inconsistent. The CoC cannot consider any plan that lacks approval, which must be obtained before submission.
Timelines and Harmonisation with Competition Act
The court ruled that regulatory model timelines do not take precedence over existing statutory requirements. IBC and Competition Act timelines do not conflict in most cases, but the system requires mandatory procedures to be followed except for uncommon cases. The parties involved in the case can request CCI approval at multiple points during the process, which normally requires the 330-day CIRP limit but allows for extensions in rare instances that do not involve the parties.
The Role and Powers of Resolution Professional
The Resolution Professional (RP) must ensure that all Resolution Plans which he evaluates satisfy every legal requirement including the Competition Act, 2002. The RP must follow all statutory requirements without any authority to permit exemptions. The RP sent a post-CoC CCI email which exceeded his power, and only CCI-approved plans should be placed before the CoC. The CoC will not accept any modifications to the plan after it receives their approval. The CIRP process’s finality gets disrupted by conditional CCI approvals which create uncertainty and enable potential abuse.
The CCI failed to issue mandatory Show Cause Notices (SCN) to all parties, particularly the target HNGIL, as required under Section 29 (1) of the Competition Act, 2002. The target company needs to participate in all voluntary modifications, which makes the lack of an SCN invalid the CCI approval process.
The NCLAT used Arcelor Mittal, Makalu Trading, and Vishal Vijay Kalantri as case law to support its decision, but those cases lacked essential details because they were different from the present case. The dismissal of SLPs without any explanation does not establish a legal precedent which others must follow.
The Section 31(4) of IBC functions as a mandatory requirement according to the majority decision. The CoC rejected AGI Greenpac’s plan because it did not have CCI approval, which resulted in the CoC approval being overturned and all subsequent plan activities becoming invalid. The CoC needed to evaluate only those plans which had CCI approval at the time of 28th October 2022. The lead appeal received approval, which resulted in the connected appeals getting resolved according to that decision.
Minority Opinion
The minority opinion of Mr. Justice S.V.N. Bhatti examined the legal status of the proviso which they determined to be an advisory requirement. It was argued that CCI approval at the Adjudicating Authority stage is sufficient, literal compliance may defeat the CIRP’s objective, and NCLAT/CCI findings on procedural lapses were affirmed. The appeals were dismissed with costs.
Ratio Decidendi
The case establishes that the proviso to Section 31(4) of IBC is mandatory. CCI approval must precede CoC approval for combination plans. The RP cannot relax statutory requirements. Conditional or post-CoC approvals are invalid and procedural compliance under the Competition Act, 2002 is essential. Unsuccessful applicants have locus to appeal which protects fairness in the insolvency process.
Critical Analysis
The Supreme Court’s decision in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja demonstrates an established preference for legal interpretation through existing statutes instead of using statutes for operational purposes. The court established CCI clearance requirements as essential before CoC members could vote on resolution plan approval thereby bringing more legal stability to insolvency procedures. The court has limited the Resolution Professional’s ability to manage his work because it determined that he must follow all statutory regulations without exception. The decision establishes a precedent which requires parties to follow legal statutes according to existing laws.
